There is a clear global trend toward increased digitalization of the financial services industry. In Canada, the potential of financial technology to enhance accessibility, diversify offerings and bring new competition to its oligopolistic banking sector is still in its early stages. Consumer adoption of financial technology (fintech) products and services remains relatively low compared with other advanced economies, despite a generally positive perception of fintech services among consumers. New participants in the banking sector offer innovative, competitively priced services, but they face significant barriers. Established banks leverage historical advantages such as extensive branch networks and brand recognition, while also advancing their own fintech through subsidiaries or acquisitions of potential competitors. The state of fintech adoption extends beyond market efficiency concerns to fundamental questions of consumer choice and market freedom in a liberal democracy. While the concentrated banking sector provides stability, it restricts competition and consumer autonomy, as evidenced by limited options to switch providers. Policy makers should move quickly to implement policy innovations such as open banking while strengthening consumer protection mechanisms and increasing consumer representation in financial sector policy making.
